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Cohen Analysis: SCOTUS Defers

What Congress creates this Court isn't willing or likely to destroy. That's what I take from Monday's Supreme Court decision prohibiting federal lawsuits against HMOs accused of improperly cutting treatment costs at the expense of needed patient services.

Consistent with its recent tendency to grant great deference to legislatures, both state and federal, the Court ruled that the current HMO set-up, for better or worse, was designed by Congress and can only be changed by Congress. All nine judges went along with the decision, including the more judicially-liberal members of the Court, who usually are a little less inclined to preclude an individual's right to seek federal relief.

Justice David H. Souter, writing for the Court, said that "since the provision of profit is what makes the HMO a proprietary organization, {the plaintiff's} remedy in effect would be nothing less than elimination of the for-profit HMO." The "profit" Souter is talking about is the profit incentive given to doctors, incentive which many patients, and the plaintiff in this case, believe to be a violation of the doctor's duty of care and loyalty to his or her patient.

If a doctor has an interest in cutting costs, the argument goes, the doctor has an inherent conflict of interest when treating a patient  a conflict which ought to resolved in a court of law. But that legitimate concern can't be resolved in federal court under federal law, according to the Supreme Court. "The federal judiciary," Souter wrote, "would be acting contrary to the congressional policy of allowing HMO organizations if it were to entertain a claim portending wholesale attacks on existing HMOs solely because of their structure."

In other words, Souter said that the Court wasn't willing to poke its nose into a fight which properly ought to take place back in Congress.

And that fight, indeed, is taking place in Congress. The House is now considering patients' rights legislation which might give patients a statutory right to sue their HMOs  a right that the Court would then be hard-pressed to take away. Look for this issue to heat up in the wake of Monday's ruling and look for it to be a big part of the upcoming election campaign.

Meanwhile, the ruling does not appear to void state laws designed to give patient-plaintiffs the right to seek redress against their HMOs. A number of states already preclude health-maintenance organizations from giving doctors financial incentives for cost-cutting. And Souter actually noted in Monday's decision that allowing federal lawsuits like the one contemplated in the case would actually have pre-empted  precluded, if you will  some of these state claims.

Finally, it's important to note that even if Monday's decision means that angry folks cannot for the time being sue their HMOs under federal law, those folks still can sue their doctors  and by extension the HMOs  under age-old state heories like medical malpractice. In fact, there are some experts in this field of law who believe that plaintiffs are better off seeking relief in state courts anyway because there are a larger range of theories to use and fewer damage-award restrictions than there are under federal law.